Trump's Support For China's One Belt, One Road Initiative Is Bad For U.S., Good For World

Chinese President Xi Jinping at the end of the Belt and Road Forum for International Cooperation on May 15, 2017 in Beijing, China. (Photo by Jason Lee-Pool/Getty Images)

In a sharp shift in U.S. policy from that of the Obama Administration, President Donald Trump recently agreed to send an American representative to the recent One Belt, One Road forum. U.S. participation in President Xi Jinping's flagship project marks a new period of American support for Chinese political and economic power, and greater participation among American firms in the OBOR endeavor. However, OBOR may be bad for the U.S. in the long run, even while benefiting the rest of the world.

U.S. and OBOR

Matthew Pottinger, the Senior Director for Asia at the National Security Council, has encouraged China to set up a transparent bidding process, and has said that American companies have “much to offer” the OBOR program. American firms have been angling to profit off of the initiative. Construction, engineering, and finance firms are attempting to provide the OBOR project with sophisticated American goods and services. Already, GE is providing equipment for OBOR, while Honeywell has been selling natural gas processing equipment to countries in Central Asia.

Although candidate Trump supported the OBOR initiative, his position clashes sharply with his anti-China trade rhetoric. Supporting OBOR means boosting China’s political and economic power across much of the world. This occurs when infrastructure projects are successfully carried out under Chinese management and supervision. While American firms can certainly benefit by providing necessary tools to building the new Silk Road, ultimately it is China that stands to gain from trade and business deals with OBOR countries.

OBOR as development engine

A general view of the first China Railway Express, a new railway line from China to Europe in June 2016. (AP Photo/Czarek Sokolowski)

This is not to say the OBOR undertaking is a bad thing, since it will spur development across several continents if successful. As Branko Milanovic, a preeminent scholar on global inequality, wrote this week in The Guardian, “for development to happen, you need 'hard' stuff: you need roads for farmers to bring their goods, you need fast railroads, bridges to cross the rivers, tunnels to link communities living at different ends of a mountain. Obor proposes an activist view of development scaled up to the level of three continents.” This is high praise for a project that has been viewed by critics as a new type of Chinese imperialism.

Certainly, there is no undertaking today that is as ambitious in scale and scope as OBOR. Although development banks continue to carry out important pro-development projects around the world, seldom are they united under a greater banner, and almost never under one this massive, particularly during a period of peace. OBOR aims to build up roads, bridges, energy infrastructure, manufacturing zones, leisure and tourism areas and more, across Asia, Central Asia, Europe and Africa, and is primarily financed by China-led development funds and Chinese banks. This is expected to ratchet up economic activity in infrastructure-poor areas.

Bad for the U.S.

The political fallout for the current administration is that Trump looks weak on China. He has come nowhere close to the rhetoric he used on the campaign trail, where he stated he would raise tariffs and label China a “currency manipulator” so the Chinese “understand that we’re not playing games anymore.” Instead, Trump stated last month, “they’re not currency manipulators” and his administration has recently dubbed an extremely weak bilateral trade deal a “herculean effort.”

Now Trump is supporting President Xi Jinping’s signature policy, which promises to thrust China into a central position as global benefactor and economic hegemon. In the past, supporting this would not have been acceptable in U.S. foreign policy, in large part due to the nature of China’s authoritarian regime, insensitivity to human rights violations, and lack of qualms about doing business with dictators.

Although Trump himself has few reservations about making deals with strongmen, having invited Turkish President Recep Erdogan and Philippines President Rodrigo Duterte to the White House, ultimately U.S. support of OBOR will weaken American ideological and economic influence in the rest of the world as deals are struck between OBOR countries and China. Neither the optics nor the reality of this is good for the U.S., since it only serves to break down American political prowess.

Good for the world

Despite the awkward position of the U.S., OBOR is good for the developing world, providing much-needed infrastructure, energy and industry. The program has not been around long, and only time will tell whether these investments will be profitable and sustainable in the long run. However, the grand vision put forward by President Xi is unique and, at the moment, full of potential.

Through OBOR, China will provide infrastructure, one of the most basic prerequisites to development. As individuals and firms gain access to manufacturing, transportation and trade, economies and relations can blossom.

In supporting China’s OBOR project, U.S. President Trump is giving up long-term political capital for short-term profits.

I am an Associate Professor of Economics at the State University of New York at New Paltz, and have published over six books and fifteen journal articles on the Chinese economy and financial sector. I have published one of the only English language books on the topic of Chin...